Introduction to this report:
The collection of levosa and budesonide caused respiratory pressure for 24 years. Tobramycin is expected to accelerate quarterly release, and salmetroticasone is expected to be approved for marketing in 24Q2, which is expected to drive positive respiratory growth and maintain the “increase” rating.
Key points of investment:
Maintain an “Overweight” rating. 2024Q1's annual revenue was 4.340 billion yuan (-4.8%), net profit attributable to mother was 404 million yuan (-5.0%), and net profit after deducting non-return to mother was 428 million yuan (-4.3%). The results were in line with expectations.
Maintaining the 2024-2026 EPS forecast of 0.84/0.97/1.13 yuan. Referring to comparable company estimates, we are optimistic that the accelerated intake of tobramycin will give a certain valuation premium, give PE18X in 2024, raise the target price to 15.12 yuan (+1.44 yuan), and maintain the “gain” rating.
Chemicals are under pressure for a short period of time, and the release of tobramycin is expected to accelerate season by season. ① The revenue of the 2024Q1 chemical sector was 2.41 billion yuan (-4.9%), of which gonadotropin products were 807 million yuan (+39.9%), representing a low base of leuprorelin and a high number of shipments in a single quarter in 24Q1 during the same period in 23 years. We believe that subsequent national sales will need to absorb the low prices of Guangdong Co-production, and it is expected to achieve single-digit growth throughout the year. Digestive tract products amounted to 589 million yuan (-25.7%), which was affected by the high base and price reduction of iprazole injections during the same period in '23. Respiratory formulation products were 417 million yuan (-18.2%). Affected by Zuo Sha's high base and collection in the same period in '23, we are optimistic that tobramycin will accelerate quarterly, which is expected to make up for the decline in revenue due to renewed contracts with zoxa harvesting and budesonide collection and achieve positive growth; ② The revenue of APIs and intermediates was 1,399 billion yuan (-3.7%), mainly affected by the high base of meropenem. The price of 7ACA rebounded slightly in early '24, and is expected to resume growth in 2024. ③ Revenue from traditional Chinese medicine formulations was 406 million yuan (-28.4%), affected by the high base of Shenqi Fuzheng and antiviral particles during the same period in '23. The overall high base of antiviral granules23 was under pressure for 24 years. It is expected that the amount will be further released after the cancer restrictions on the medical insurance list are lifted.
R&D is being actively promoted, and the breathing sector ushered in increased performance due to the launch of new products during the year. Salmetroticasone has completed a supplement and is expected to be approved for listing in 24Q2, contributing to increased performance. TG-1000 multi-center phase III has reached the main end point, with good efficacy and safety. It is expected to be declared for listing in 24Q3, approved for marketing in '25, and is expected to accelerate in '26.
Catalyst: Release volume exceeded expectations after inclusion in health insurance; CDE approval of new products progressed beyond expectations.
Risk warning: collection risk; risk of fluctuating API prices.